Half Yearly Report

RNS Number : 1357A

F&C Managed Portfolio Trust PLC

26 January 2011

 



To:      RNS

Date:  26 January 2011

From: F&C Managed Portfolio Trust plc

Interim Results

The Board of F&C Managed Portfolio Trust plc announces the unaudited interim results of the Company for the six month period to 30 November 2010.

 

Chairman's Statement

Highlights

During the period:

·      Both Income and Growth shares outperformed their FTSE All-Share benchmark

·      Both shares continued to trade at a small premium to NAV

·      Strong demand enabled all shares remaining in treasury to be sold and the issuance of new shares at a premium

Investment performance

For the six months to 30 November 2010, the net asset value (NAV) total return was 12.3% for the Income shares and 11.1% for the Growth shares.  The total return for the benchmark index for both Portfolios, the FTSE All-Share Index, was 8.6% and the total return for the Investment Company sector, as measured by the FTSE Equity Investment Instruments Index, was 11.1%. It was particularly pleasing to see the strong performance of the Growth portfolio which has tended to lag in previous periods.  Moreover, since launch in April 2008, a period which covers the full onslaught of the financial crisis, the Income shares have produced a total return of 10.1%, well in excess of the 2.6% from the FTSE All-Share Index.

A key element behind the strong relative performance of investment companies was the trend towards narrower discounts. Over the past six months the average sector discount (excluding property, private equity and hedge funds) has tightened from 9.5% to 8.3% (data from Winterflood). Of particular note has been the high ratings accorded to higher yielding investment companies which reflect the low level of yield available on gilts and cash deposits.

During the period we deployed a modest level of gearing of approximately £1 million in the Income Portfolio or 4-5% of its NAV. This took advantage of the current low cost of borrowing relative to the attractive yields that could be earned from higher yielding investment companies. The borrowing was invested primarily into existing holdings and provides a useful contribution to income.

Within the Growth Portfolio there were particularly strong performances from trusts invested in UK Mid and Small Cap companies (Montanaro UK Smaller Companies +35% and Schroder UK Mid and Small Cap Fund +24.6%). Strong investment selection assisted Jupiter European Opportunities Trust to a 26.9% gain. In the Income Portfolio strong contributions came from trusts invested in Pacific and Emerging Markets (Utilico Emerging Markets +20.6% and Schroder Oriental Income Fund +19.7%). Also the largest holding, British Assets Trust, achieved a 19.7% gain over the period.

(All figures are share price total return)

Revenue and dividends

Under the Company's capital structure any net revenue arising on the Growth Portfolio is transferred to the Income Portfolio in exchange for a capital contribution of an identical amount. Income shares are entitled to all the dividends paid by the Company which are paid quarterly in October, January, April and July each year.

The Directors have declared a first and second interim dividend in respect of the year to 31 May 2011, each of 1p per Income share. The second interim dividend was paid to Income shareholders, on 7 January 2011, after the period end.

In the absence of unforeseen circumstances, the Board intends to pay three interim dividends, each of 1p per Income share in the current financial year. The amount of the fourth interim dividend for the year, which last year was 1.4p, will be determined when a clearer view of income for the year emerges.  If, as we hope but cannot forecast at present, we are able to maintain last year's total annual distribution of 4.4p per Income share, the yield on the Income share price at 30 November 2010 would be 4.5%.

The revenue reserves which many investment trusts retain has enabled them at least to maintain dividend payments over the period. Dividends from UK companies are now rising once more after the cuts from banks and BP. In due course this should feed through to permit investment companies to raise their dividends.

Discount to NAV and share buy-backs

The share price of investment trusts does not always reflect closely their underlying NAV and many trusts trade at a substantial discount.  In normal circumstances we aim to maintain our discount at not more than 5% by buying back shares from time to time.  During the six months to 30 November 2010 we have been able to maintain an average premium of 3.3% for the Income shares and 2.6% for the Growth shares. At 30 November 2010, the Income shares stood at a premium of 3.3% to NAV and the Growth shares at a premium of 1.8%.

By maintaining these ratings we have been able to sell shares from treasury and issue new shares to meet demand. During the period the Company sold all 427,000 Income shares and all 1,760,000 Growth shares remaining in treasury. In addition a further 175,000 Income shares and 440,000 Growth shares were issued from the Company's block listing facility, increasing the Company's share capital.  The effect of these transactions was to provide a modest enhancement to the NAV of both share classes.

Outlook 

Capital markets face a number of challenges, of which inflation in Asia and also the UK are of immediate concern. However economic growth is widely established and fears of deflation have receded. Equities remain attractive, particularly in comparison with cash and bonds. We retain a wide spread of investments across many regions and sectors.

Richard M. Martin

Chairman

26 January 2011

Unaudited Condensed Income Statement

Six months to 30 November 2010

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	3,796	3,796
Income	2	561	-	561
Investment management and performance fee	3	(36)	(115)	(151)
Other expenses		(148)	-	(148)
Return on ordinary activities before finance costs and tax		377	3,681	4,058
Finance costs		(1)	(2)	(3)
Return on ordinary activities before tax		376	3,679	4,055
Tax on ordinary activities		-	-	-
Return attributable to shareholders	4	376	3,679	4,055
Return per Income share (pence)	4	1.72p	8.76p	10.48p
Return per Growth share (pence)	4	-	9.47p	9.47p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Unaudited Condensed Income Statement

Six months to 30 November 2009

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	4,301	4,301
Income	2	543	-	543
Investment management and performance fee	3	(30)	(66)	(96)
Other expenses		(114)	-	(114)
Return on ordinary activities before tax		399	4,235	4,634
Tax on ordinary activities		(7)	-	(7)
Return attributable to shareholders	4	392	4,235	4,627
Return per Income share	4	1.89p	11.00p	12.89p
Return per Growth share	4	-	10.80p	10.80p

The total column of this statement is the Profit and Loss Account of the Company. 

The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Condensed Income Statement (audited)

Year to 31 May 2010

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	5,746	5,746
Income	2	1,314	-	1,314
Investment management and performance fee	3	(61)	(142)	(203)
Other expenses		(285)	-	(285)
Return on ordinary activities before tax		968	5,604	6,572
Tax on ordinary activities		(12)	-	(12)
Return attributable to shareholders	4	956	5,604	6,560
Return per Income share (pence)	4	4.58p	12.54p	17.12p
Return per Growth share (pence)	4	-p	16.82p	16.82p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing activities.

Unaudited Condensed Balance Sheet

As at 30 November 2010

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Non-current assets
Investments at fair value		21,842	18,385	40,227
Current assets
Debtors		58	116	174
Cash at bank and on deposit		-	394	394
		58	510	568
Creditors
Amounts falling due within one year		(941)	(57)	(998)
Net current (liabilities)/assets		(883)	453	(430)
Net assets		20,959	18,838	39,797
Capital and reserves
Called-up share capital	6	2,208	1,956	4,164
Share premium		295	643	938
Capital redemption reserve		-	182	182
Special reserve		19,380	17,211	36,591
Capital reserves		(1,210)	(1,154)	(2,364)
Revenue reserve		286	-	286
Shareholders' Funds	7	20,959	18,838	39,797
Net asset value per share (pence)	7	94.91p	96.31p

Unaudited Condensed Balance Sheet

As at 30 November 2009

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Non-current assets
Investments at fair value		17,089	13,766	30,855
Current assets
Debtors		51	10	61
Cash at bank and on deposit		329	376	705
		380	386	766
Creditors
Amounts falling due within one year		(99)	(51)	(150)
Net current assets		281	335	616
Net assets		17,370	14,101	31,471
Capital and reserves
Called-up share capital		2,191	1,937	4,128
Capital redemption reserve		-	157	157
Special reserve		18,371	15,950	34,321
Capital reserve		(3,480)	(3,943)	(7,423)
Revenue reserve		288	-	288
Shareholders' Funds	7	17,370	14,101	31,471
Net asset value per share (pence)	7	84.40p	80.76p

Condensed Balance Sheet (audited)

As at 31 May 2010

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Non-current assets
Investments at fair value		18,013	14,743	32,756
Current assets
Debtors		41	19	60
Cash at bank and on deposit		717	356	1,073
		758	375	1,133
Creditors
Amounts falling due within one year		(125)	(66)	(191)
Net current assets		633	309	942
Net assets		18,646	15,052	33,698
Capital and reserves
Called-up share capital	6	2,191	1,912	4,103
Share premium		99	5	104
Capital redemption reserve		-	182	182
Special reserve		19,055	15,866	34,921
Capital reserves		(3,130)	(2,913)	(6,043)
Revenue reserve		431	-	431
Shareholders' Funds	7	18,646	15,052	33,698
Net asset value per share (pence)	7	86.81p	86.70p

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2010

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow/(outflow) from operating activities		288	(33)	255
Cash outflow from servicing of finance		(2)	-	(2)
Net cash outflow from financial investment		(1,817)	(1,956)	(3,773)
Equity dividends paid		(521)	-	(521)
Net cash outflow before financing		(2,052)	(1,989)	(4,041)
Net cash inflow from financing		538	2,027	2,565
(Decrease)/increase in cash		(1,514)	38	(1,476)
Reconciliation of net cash flow to movement in net (debt)/cash
(Decrease)/increase in cash as above		(1,514)	38	(1,476)
Opening net cash		717	356	1,073
Closing net (debt)/cash		(797)	394	(403)
Reconciliation of net return before taxation to net cash inflow/(outflow) from operating activities
Net return before finance costs and taxation		2,299	1,759	4,058
Gains on investments		(2,011)	(1,785)	(3,796)
Changes in working capital and other non-cash items		-	(7)	(7)
Net cash inflow/(outflow) from operating activities		288	(33)	255

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2009

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		259	23	282
Net cash (outflow)/inflow from financial investment		(583)	629	46
Equity dividends paid		(498)	-	(498)
Net cash (outflow)/inflow before financing		(822)	652	(170)
Net cash inflow/(outflow) from financing		170	(885)	(715)
Decrease in cash		(652)	(233)	(885)
Reconciliation of net cash flow to movement in net cash
Decrease in cash as above		(652)	(233)	(885)
Opening net cash		981	609	1,590
Closing net cash		329	376	705

Reconciliation of net return before taxation to net cash inflow/(outflow) from operating activities
Net return before finance costs and taxation		2,672	1,962	4,634
Withholding tax suffered		(5)	(2)	(7)
Gains on investments		(2,369)	(1,932)	(4,301)
Changes in working capital and other non-cash items		(39)	(5)	(44)
Net cash inflow from operating activities		259	23	282

Condensed Statement of Cash Flows (audited)

Year to 31 May 2010

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		693	119	812
Net cash (outflow)/inflow from financial investment		(998)	588	(410)
Equity dividends paid		(919)	-	(919)
Net cash (outflow)/inflow before financing		(1,224)	707	(517)
Net cash inflow/(outflow) from financing		960	(960)	-
Decrease in cash		(264)	(253)	(517)
Reconciliation of net cash flow to movement in net cash
Decrease in cash as above		(264)	(253)	(517)
Opening net cash		981	609	1,590
Closing net cash		717	356	1,073
Reconciliation of net return before taxation to net cash inflow from operating activities
Net return before finance costs and taxation		3,583	2,989	6,572
Withholding tax suffered		(9)	(3)	(12)
Gains on investments		(2,878)	(2,868)	(5,746)
Changes in working capital and other non-cash items		(3)	1	(2)
Net cash inflow from operating activities		693	119	812

Unaudited Condensed Reconciliation of Movements in Shareholders' Funds

Six months to 30 November 2010

Notes		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		18,646	15,052	33,698
Increase in share capital in issue		164	419	583
Sales of shares from treasury		374	1,608	1,982
Transfer of net income from Growth shares to Income shares		18	(18)	-
Transfer of capital from Income shares to Growth shares		(18)	18	-
Dividends paid	5	(521)	-	(521)
Return attributable to shareholders		2,296	1,759	4,055
Closing shareholders' funds		20,959	18,838	39,797

Unaudited Condensed Reconciliation of Movements in Shareholders' Funds

Six months to 30 November 2009

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		15,031	13,026	28,057
Sale of shares from treasury		412	72	484
Shares purchased for treasury		(242)	-	(242)
Shares purchased for cancellation		-	(957)	(957)
Transfer of net income from Growth shares to Income shares		63	(63)	-
Transfer of capital from Income shares to Growth shares		(63)	63	-
Dividends paid		(498)	-	(498)
Return attributable to shareholders		2,667	1,960	4,627
Closing shareholders' funds		17,370	14,101	31,471

Condensed Reconciliation of Movements in Shareholders' Funds

Year to 31 May 2010 (audited)

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		15,031	13,026	28,057
Sales of shares from treasury		1,203	196	1,399
Shares purchased for treasury		(243)	-	(243)
Shares purchased for cancellation		-	(1,156)	(1,156)
Transfer of net income from Growth shares to Income shares		189	(189)	-
Transfer of capital from Income shares to Growth shares		(189)	189	-
Dividends paid		(919)	-	(919)
Return attributable to shareholders		3,574	2,986	6,560
Closing shareholders' funds		18,646	15,052	33,698

Statement of Principal Risks and Uncertainties

The Company's assets consist mainly of listed equity securities and its principal risks are therefore market-related.  The most important types of risk associated with financial instruments are credit risk, market price risk, liquidity risk, interest rate risk and foreign currency risk.  Other key risks faced by the Company include external, investment and strategic, credit risk, regulatory issues, operational and financial risks.

These risks, and the way in which they are managed, are described in more detail under the heading "Principal risks and risk management" within the Report of the Directors in the Company's 2010 Annual Report. 

The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

Statement of Directors' Responsibilities in Respect of the Interim Report

We confirm, that to the best of our knowledge:

·      the condensed set of financial statements have been prepared in accordance with the Statement 'Half-Yearly Financial Reports' issued by the UK Accounting Standards Board and  give a true and fair view of the assets, liabilities, financial position and return of the Company;

·      the Chairman's Statement includes a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R(1), being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;

·      the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R(2); and

·      the condensed set of financial statements includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Richard M. Martin

Chairman

26 January 2011

Notes

1.  Accounting Policies

The unaudited interim results have been prepared on the basis of the accounting policies set out in the Company's statutory financial statements for the year ended 31 May 2010. These accounting policies are expected to be followed throughout the year ending 31 May 2011.

2.  Income

	Six months to 30 November 2010	Six months to 30 November 2009	Year to 31 May 2010
	£'000	£'000	£'000
UK dividends	388	435	1,047
Overseas dividends	171	106	263
Deposit interest	2	2	4
Total income	561	543	1,314

3.  Investment management and performance fee

    There have been no changes to the terms of the management and performance fee arrangements with F&C Investment Business Limited, which are set out in detail in the Annual Report and Accounts to 31 May 2010.  During the period, the Company has incurred management fees of £117,000, of which £62,000 is payable to F&C Investment Business Limited at the period end. A performance fee in relation to this six month period of £34,000 has also been provided for in the Income Portfolio at 30 November 2010.  At 31 May 2010 performance fees totalling £46,000 had been recognised and accrued as the total return of the Income Portfolio since launch had exceeded that of the FTSE All-Share Index, however as the NAV per Income share was less than 98p (NAV per Income share immediately following Admission) payment has been deferred until the end of the next financial year when the NAV per Income share is in excess of 98p.  At 30 November 2010 the total return of the Growth Portfolio since launch did not exceed that of the FTSE All-Share Index and a performance fee has not been recognised.                                             

4.  Return per share

     The return per share for the six months to 30 November 2010 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	358	1,938	2,296	18	1,741	1,759
Transfer of net income from Growth to Income Portfolio	18	-	18	(18)	-	(18)
Transfer of capital from Income to Growth Portfolio	-	(18)	(18)	-	18	18
Return attributable to shareholders	376	1,920	2,296	-	1,759	1,759
Return per share	1.72p	8.76p	10.48p	-	9.47p	9.47p
Weighted average number of shares in issue during the period		21,904,755			18,567,807

     The return per share for the comparative six months to 30 November 2009 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to shareholders	392	2,275	2,667	-	1,960	1,960
Return per share	1.89p	11.00p	12.89p	-	10.80p	10.80p
Weighted average number of shares in issue during the period		20,680,984			18,148,163

The return per share for the comparative year to 31 May 2010 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to shareholders	956	2,618	3,574	-	2,986	2,986
Return per share	4.58p	12.54p	17.12p	-	16.82p	16.82p
Weighted average number of shares in issue during the period		20,880,041			17,752,074

5.    Dividends

	Six months to 30 November 2010	Six months to 30 November 2009	Year to 31 May 2010
	£'000	£'000	£'000
Amounts recognised as distributions to Income shareholders
In respect of the previous period:
- fourth interim dividend of 1.4p per share	301	292	292
In respect of the period under review:
- first interim dividend of 1p per share	220	206	206
- second interim dividend of 1p per share	-	-	208
- third interim dividend of 1p per share	-	-	213
	521	498	919

       A second interim dividend in respect of the year to 31 May 2011 of 1p per Income share was paid on 7 January 2011 to shareholders on the register on 24 December 2010.  This amount has not been accrued in the results for the six months to 30 November 2010.

6.    Share capital

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Income shares of 10p each
Balance at 1June 2010	21,907,192	2,191	(427,000)	(43)	21,480,192	2,148
Resold from treasury	-	-	427,000	43	427,000	43
Issued	175,000	17	-	-	175,000	17
Balance at 30 November 2010	22,082,192	2,208	-	-	22,082,192	2,208

During the period the Company resold 427,000 Income shares out of treasury receiving proceeds of £374,000.  At 30 November 2010 the Company held nil Income shares in treasury.  A further 175,000 Income shares were issued for proceeds of £164,000.

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Growth shares of 10p each
Balance at 1June 2010	19,120,567	1,912	(1,760,000)	(176)	17,360,567	1,736
Resold from treasury	-	-	1,760,000	176	1,760,000	176
Issued	440,000	44	-	-	440,000	44
Balance at 30 November 2010	19,560,567	1,956	-	-	19,560,567	1,956
Total	41,642,759	4,164	-	-	41,642,759	4,164

  During the period the Company resold 1,760,000 Growth shares out of treasury receiving proceeds of £1,608,000.  At 30 November 2010 the Company held nil Growth shares in treasury.  During the period the Company also issued 440,000 Growth shares for proceeds of £419,000.

7.    Net asset value per share

	30 November 2010	30 November 2009	31 May 2010
Income shares
Net asset value per share	94.91p	84.40p	86.81p
Net assets attributable at end of period - £'000s	20,959	17,370	18,646
Shares in issue at end of period - number	22,082,192	20,580,192	21,480,192
Growth shares
Net asset value per share	96.31p	80.76p	86.70p
Net assets attributable at end of period - £'000s	18,838	14,101	15,052
Shares in issue at end of period - number	19,560,567	17,460,567	17,360,567

8.    Earnings for the six months to 30 November 2010 should not be taken as a guide to the results of the full year to 31 May 2011.

9.    Tax

       The effective revenue tax rate for the period to 30 November 2010 is nil per cent (30 November 2009: 1.8%; 31 May 2010: 1.2%).  This is lower than the rate of corporation tax for small companies due to the level of non-taxable dividend income.

10.   Bank borrowing

       During the period the Company secured a borrowing facility from its custodian JPMorgan Chase Bank.  The facility allows up to 10% of the value of the Company's investment portfolio to be borrowed and is repayable on demand.  At 30 November 2010 £796,000 had been drawn down in the Income Portfolio and nil in the Growth Portfolio.

11.   Results

       The Company's auditors, Ernst & Young LLP have not audited or reviewed the Interim Report to 30 November 2010 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.  These are not full statutory accounts in terms of Section 434 of the Companies Act 2006 and are unaudited.  Statutory accounts for the year ended 31 May 2010, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies.  The abridged financial statements included for the year ended 31 May 2010 are an extract from those accounts.  No full statutory accounts in respect of any period after 31 May 2010 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Interim Report will be posted to shareholders shortly and is available on the website: www.fcmanagedportfolio.co.uk 

For further information, please contact:

Peter Hewitt, F&C Investment Business Limited   0131 718 1244

Ian Ridge, F&C Investment Business Limited        0131 718 1010

 

END

 

 

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